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JP Morgan’s optimistic Kolanovic take on the Omicron variant of COVID-19

Back in the close of Monday’s Asian session, I gave a quick overview of the ongoing bullish case for the novel coronavirus mutation.

  • While it is likely that Omicron is more transmissible, early reports suggest it may also be less lethal, which would match the pattern of virus evolution seen historically.
  • If a less severe, more transmissible virus quickly crowds out more severe variants, could the Omicron variant be a catalyst for turning a deadly pandemic into something more similar to the seasonal flu? This development would correspond to the historical models (duration and number of waves) of previous respiratory virus pandemics, in particular given the wide availability of vaccines and new therapies which should work on all known variants (Pfizer, Merck).

A complicating factor in the market’s response to the new variant is Fed Chairman Powell’s pivot towards less dovish, which is likely to have far greater implications than this wave of concerns about this new variant.

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